United States Oil Fund LP (USO) has setup with a Bearish Flag formation. The lower line of the Flag was broken on Friday, but USO closed right at the line. A move through Friday’s low of $32.34 would signal the likelihood of USO following through to the downside with a minimum target based on the Flag of $28.84.
The beginning of the Flag Pole is $35.31, which is also at the break of the 50ema, less the low of $31.50 from 8/25/10 gives us a difference of $3.81. Using the close of Friday, $32.65, as the level of the lower Flag trend line, then subtracting the Pole measurement of $3.81, gives us a potential target of $28.84.
Friday’s price action was the fourth day down in a row and this Flag pattern is in a larger consolidation phase, which is why a break of Friday’s low is being used as a signal for bearish continuation.
